As a result, Ireland have climbed to fifth in the world rankings marking an impressive return since Schmidt took the reins at the start of the autumn.
And O'Connell, who captained the Lions in South Africa in 2009, believes the future is bright under the ex-Leinster coach.
"He's brought real clarity, a very effective way of rucking, and people are in no doubt of their role," said O'Connell.
"I just think when you have a good team and you can give players that kind of clarity, it allows them to be good players.
"He instils a lot of confidence in those around him with his philosophy, his strategy and his detail.
"It gives the younger guys in the squad a winning habit, and that's important with the challenges ahead, especially leading into the World Cup.
"We've got to harness that confidence and belief in that build-up now, to give ourselves every chance."